O2 Buys Be To Re-Enter UK Broadband Market

In a classic case of oneupsmanship O2 is joining rival network Orange (and potentially soon Vodafone) in stepping into the UK broadband market.

How on earth do you beat a company who last month announced it would offer ‘free’ connections to any customer (subject to spending over £30 per on one of its 18 month line rental contracts) though? Simple, go down a more brutal route: speed.

The company foolishly flogged by BT and now owned by Spain’s Telefonica yesterday acquired Be, Britain’s fastest ADSL2+ provider for a cool £50m. It is not just Be’s 24Mbps download and 2.5Mbps upload data rates that O2 is interested in however, oh no, just as important to the deal are the ISP’s 150 enabled exchanges and its plans to increase that number to over 400 by the year’s end. This latter figure will give O2 the potential to offer ADSL2+ connections to nearly 50 per cent of the population. By the end of 2007 should jump to 70 per cent.

Amongst all this megalomaniac-esque behaviour it is easy to forget Be itself was only formed in October 2004 and didn’t announce its presence on these shores until July 2005. Since then its growth has been meteoric, though its brief obsession with wrinkly grannies was rather disconcerting.

Stepping outside of the box for a moment it appears we’re about to enter the next stage in the country’s broadband evolution. The introduction of ADSL undoubtedly changed our experience of the web beyond all recognition before local loop unbundling made break neck speeds (including those of ADSL2+) increasingly affordable. Now the content providers are stepping in, bundling the service almost as a commodity item in order to create an easy gateway to their wares.

I wait in anticipation for the step beyond this… the one where ISPs actually pay us to surf the web. Might be some ways off though I feel…

Update:

O2 has completed its second purchase in two days today buying a 60 per cent controlling interest in high street chain The Link for £30m. Talk about making a statement...